Welcome to Get Smart about Investing. Your credit score is really important because it affects the interest rates you will pay on mortgages, car loans, and credit cards. It makes a huge difference if you are going to pay 8% instead of 6% on your mortgage, for the next 30 years, just because of your credit score. It’s hard to believe, but true, that your credit score also affects the premiums you pay for car insurance and homeowners insurance. To top it all off, many employers will even run your credit report before they hire you, as part of their background check.
The challenge is that most people don’t know what their score is or whether it’s good or not. Credit scores range from 450-850, the higher the score the better. A high score is considered 720 and above, a low score is under 620, and the average across the country is about 680. Make a point of getting your credit score at least once year so you know exactly where you stand.
I’m Greg McGraime and Now You Know!
I often hear people saying that you should never check your own credit score online b/c it could actually hurt your credit? The credit agencies supposedly monitor how many times your credit score is requested, and that actually knocks your score down. Is this true, and if so, how can i get my credit score without the markdown?
Phil Black
Comment by Phil Black on August 27, 2007 at 6:29 pm
Thank you for your question. Your credit score can influence so many different things that it is really important to understand how it works. Many people have the view that running their credit is bad for their score but that is incorrect. You can run your own credit report as many times as you want and it won’t lower your score. If a bank is running your credit however, for a credit card, mortgage or car loan for example, these inquiries will lower your score. In fact the more inquiries from companies you have over the last 12 months, the lower your score will be.
As far as checking you credit, the best place to go is www.annualcreditreport.com. Look for a post with more information on this topic next week.
Comment by gmcgraime on August 28, 2007 at 12:15 pm
I have a question. I went to a loan officer, because I wanted to see or how can I buy a house. However the loan officer check my credit report does this affect my score. Actually I found out from him that my score is 611 or 622 will this numbers go down.If they go down how can I get it up. And before I go any further with the buying a house I need to pay the outstanding balances that I have.
Please let me know.
Comment by Johanna on October 11, 2007 at 12:05 pm
Hi Johanna,
Thank you for your question on credit scores. When a mortgage loan officer runs your credit it will lower your score a little, although if this is the only financial company to check your credit over the last 12 months - it will not have a big impact.
In regard to getting your score higher, it really depends on why the score is where it is. If there are errors or inaccurate information on your report you should get those corrected asap and that can result in a higher score. Paying down some existing credit card balances will usually increase the score as well.
My advice would be to ask the loan officer for a copy of your credit report so you can see what’s on there. Unless the home purchase is already in the works, I would also recommend taking a few months to get organized, get some of your credit card balances paid off and your credit score higher. This will help you be in a stronger financial position and get more favorable terms on your mortgage. I hope that helps. Good luck!
Comment by gmcgraime on October 11, 2007 at 8:27 pm
How often does your credit score go up.
Comment by lisa on June 26, 2008 at 5:10 pm